Facts
My client was a seed-stage technology company that had granted an advisor a modest equity package, structured as restricted stock with two-year monthly vesting and no cliff, under a standard advisor agreement. The advisor's expected contribution was four to six hours per month of strategic guidance plus quarterly introductions, documented in writing in the advisor agreement. The grant was sized in the low single digits as a percentage of total equity on a fully diluted basis.
Six months into the engagement, the advisor stopped responding to emails, declined two scheduled check-ins, and made no introductions for two consecutive quarters. After two written reminders from the company's CEO, the advisor sent a brief response stating that he no longer had bandwidth to advise the company but believed his vested shares should continue to vest until the two-year term ended. The company sought to claw back the unvested portion and terminate the advisor relationship.
What I did
I read the advisor agreement, the restricted stock purchase agreement, and the email trail documenting the advisor's non-performance. The advisor agreement included a termination-for-cause provision tied to material failure to perform services, with a written-notice-and-cure mechanism. The restricted stock terms tied vesting to continued service. The non-performance pattern was well-documented in writing across multiple months, which made the termination-for-cause analysis cleanly supportable.
I drafted, on the company's behalf, a written notice of material breach with a thirty-day cure window that referenced the specific service-level expectations in the advisor agreement and listed the specific missed engagements. I also drafted, for use at the end of the cure window if the advisor did not perform, a written termination-for-cause notice and a corresponding repurchase election for the unvested shares at the agreed nominal repurchase price.
Outcome
The advisor did not cure within the thirty-day window. The company sent the termination-for-cause notice and exercised the repurchase election on the unvested shares. The advisor's vested shares remained vested under the agreement, as they should have. No claim was filed against the company; the advisor signed a brief written acknowledgment confirming the clawback. The matter closed cleanly. Each matter turns on its facts; the outcome here does not predict the outcome on a similarly framed advisor dispute.
Lesson
An advisor grant only works as intended if the advisor agreement documents the expected service level in writing and the restricted stock terms tie vesting to continued service with a meaningful termination-for-cause mechanism. Boilerplate advisor agreements that say "advisor will provide such services as reasonably requested" without a service-level commitment are weak when an advisor goes quiet. The clean clawback in this matter was possible only because the original paperwork had been drafted to support it. Doing the paperwork well at grant time is what makes the clawback work later.
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